Sun International suffer heavy loss due to COVID-19 lock-downs

Sun International, a leading hospitality and gaming company, has reported a significant loss due to the impact of the COVID-19 lock-downs. The company experienced a dip in revenue of 55% in its South African operations and reported a headline earnings loss of 702 cents per share. Sun International CEO, Anthony Leeming, discussed the challenges faced by the company and its outlook for recovery in an interview with CNBC Africa. Despite the difficulties, Leeming remains optimistic about the future but acknowledges that the road to recovery will be slow. The initial lock-down measures imposed to contain the spread of COVID-19 forced the closure of Sun International's operations for over three months, leading to a substantial financial setback. The company's performance in July and August showed some signs of improvement, with casino revenue slowly increasing from 39% to close to 60% and LPM side revenue reaching around 70%. However, the restrictions, including curfews and limited operating hours, continue to impact the company's operations. Leeming highlighted the ongoing retrenchment processes in South Africa and Chile as the company grapples with the economic fallout of the pandemic. He emphasized that the recovery would not happen overnight and would require the lifting of restrictions to fully regain momentum. Despite the challenges, Sun International managed to achieve cash-positive results in July and is optimistic about a stronger performance in August, indicating some progress in its recovery journey. The slow recovery is further compounded by the varying demands across different sectors within the company. While casino activities have shown an uptick in demand, other areas such as hotels and resorts are expected to face a longer recovery period. The revival of the tourism industry, corporate events, and international travel will play a crucial role in determining the pace of Sun International's recovery. In an effort to enhance its liquidity position, Sun International implemented a 1.2 billion rand rights offer and divested its 65% interest in SanGGeams. The company reassured stakeholders that liquidity would not be a pressing issue, citing negotiations with banks and the injection of capital through these strategic moves. The disposal of assets is expected to bolster liquidity and provide a buffer against any potential future lock-downs or restrictions. Looking ahead, Leeming remains cautiously optimistic about Sun International's ability to navigate the challenges posed by the pandemic. While the road to recovery may be long and arduous, the company's proactive measures and strategic decisions are aimed at securing its financial stability and ensuring sustainable growth in the post-pandemic landscape.